Draft policy for NSE demutualisation ready

August 2, 2011
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, NAIROBI, Kenya, Aug 2 – The Capital Markets Authority (CMA) in consultation with the Demutualisation Steering Committee (DSC), has come up with a draft policy document to govern the demutualisation of the Nairobi Stock Exchange.

The legal framework is focused on providing the necessary guidance for the process of demutualisation as well as setting out the key requirements for the demutualisation process in order to support the continued growth of the capital markets in Kenya.

The exposure of the regulations gives all stakeholders including members of the public an opportunity to provide their comments by August 30, 2011.

Among the recommendations to be considered include the proposed authorised and paid-up share capital of the demutualised exchange with the number of shares to be issued. Stakeholders will also go over the names of members of the Exchange proposed to be the initial shareholders of the demutualised exchange and the number of shares to be allotted to each shareholder.

Post demutualisation, the share holding will see current members get an 80 percent stake while the Investor Compensation Fund receives a 10 percent stake. The government, through the Treasury will receive a further 10 percent of the bourse.

CMA Board Chairman Kung’u Gatabaki said implementing reforms was part of the reform agenda to deepen the capital markets to play a bigger role in mobilising resources as well as opening up the bourse to the public.

‘‘We continue to facilitate the growth and diversification of our financial markets to keep up with the capital demands for infrastructure development and economic empowerment,” Mr Gatabaki said.

Demutualisation of the NSE is aimed at improving business, discipline and governance, while making the bourse a commercially viable entity among other things.

The NSE has 20 members and the decision to allocate 80 percent is set to come under sharp focus, given the feeling demutualisation was aimed at curtailing stockbrokers’ influence on the stock exchange when they flout regulations.

The NSE is ranked the fifth biggest market in Africa by market capitalisation, and it is believed the process will improve this ranking, wooing more investors into the country.

With the demutualisation, the DSC has passed a number of recommendations key among them a proposed renaming of the bourse to the Nairobi Securities Exchange to promote increased efficiency driven by open competition in the provision of services.

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